Eureka! The Postal Service finds gold in California

The Postal Service has been actively selling off historic post office buildings for over a year now. About forty have been sold or put up for sale. They’re scattered around the country, but for some reason more than a third of them are in California.

Last week news came out that one of the most beautiful post offices in the country would be sold, the 1915 post office in Berkeley. The protest is already beginning (SF Gate and Daily Californian).

The Berkeley post office was built during a period when many believed architectural beautification could bring harmony to urban living, explains Gray Brechin, UC-Berkeley geography professor and founder of the Living New Deal. “The federal government went to special lengths to give Berkeley one of the handsomest postal facilities in the state and possibly the nation,” says Brechin. “It represents the high idealism of the City Beautiful Movement.”

Apparently the country is done with that kind of idealism, and rather than building beautiful public places, the federal government is selling them off. What’s going on in California is one of the main reasons the National Trust named the Historic Post Office to its list of America’s 11 Most Endangered Places of 2012.

Historic post offices are highly prized by their communities. They anchor the downtown area, help local businesses, enable people to walk to the post office, and elicit pride of place. People may complain about the long lines, but they love their grand old post office.

If something doesn’t stop the sell-off, it looks as though the Postal Service is prepared to dispose of all 2,200 of the country’s historic post offices. Postal officials seem to think that this legacy belongs to them, to do with as they please. They forget that these post offices are the property of the American people. They seem unaware of the magnitude of the crime they’re committing.

The Postal Service says it needs the money these sales bring in, and the old buildings cost too much to maintain, especially when a lot of space is underutilized. But the sales bring in a relatively small amount of money in the context of the USPS budget, the maintenance costs are less than the rent the Postal Service pays on the replacement post office, and the underused space is the Postal Service’s own fault. Rather than making the most of the downtown location, the Postal Service moves letter carriers to other locations (which also cost money to lease or maintain), so that the mail processing that used to go on in the back now goes on somewhere else, leaving just the retail services in the building.

The explanations offered by the Postal Service disguise what’s really going on. The Postal Service is selling off its properties because divestiture of assets, along with outsourcing, is one of the main steps in the process of privatization. The plans have been in the works for a long time. Back in 1998, President Reagan’s Commission on Privatization recommended selling off “obsolete buildings in central business districts” — historic downtown post offices — to help move the Postal Service toward privatization. You can read all about it in the Commission’s report, “Privatization: Toward More Effective Government” (pp. 122-125).

Why California?

California has fourteen historic post offices that have been sold, put on the market, or planned for sale — the most of any state in the country. Connecticut is number two, with five (most of them in the “Gold Coast” area around Westport). Several other states have one or two.

One might assume that so many historic post offices are being sold in California because the state has an unusual number of them, but that explanation doesn’t hold up. California ranks fifth in terms of how many historic posts offices it possesses, 106. New York is number one (with 238); Pennsylvania, second (182); then come Illinois (170) and Ohio (126). Yet these states have only one or two historic post offices for sale.

Of California’s approximately 1,800 post offices, the Postal Service owns around 600. Using fifty years old as a rule of thumb for listing on the National Register of Historic Places, over a hundred California post offices are eligible and 24 are currently on the Register. (A list of California’s historic post offices is here, a map here, and a spreadsheet showing how post offices and historic buildings break down state-by-state, here.)

Percentage-wise, California is not at all unusual in the number of historic post offices it possesses. About 6 percent of the state’s post offices are historic, which ranks California 29th. By contrast, in the New England states, about 13 percent of the post offices are historic.

There must be another reason why the state is seeing so many sales compared to other states. One possible explanation is that postal management in the Pacific District is simply being more aggressive about selling post offices than other districts, perhaps to please postal headquarters back east. It’s also possible that the California post offices are among the country’s most valuable, and the Postal Service wants to work on the big-ticket items first. That would also explain why it sold off the post offices in Connecticut’s Gold Coast and Palm Beach, Florida. Or maybe the Postal Service is just starting the divestiture process on the West Coast, intending to work its way east, so it’s only a matter of time before other states suffer their share of the damage.

The California Connection

Whatever the explanation, there’s another interesting angle to the California story. Last year, the Postal Service signed a contract with the CBRE Group (aka CB Richard Ellis), the world’s largest commercial real estate company, to handle sales and leases. The partnership has not pleased postal lessors, and the USPS OIG has been looking into the problems, though its report seems stalled.

The Postal Service and CBRE soon set up a website advertising many of the USPS properties for sale. But overall, the company seems to be taking a low profile. Some properties have been put up for sale without appearing on the website, and CBRE rarely gets mentioned in news articles about pending or completed sales.

The California connection is that CBRE is headquartered in Los Angeles, and the Chairman of the Board is Richard C. Blum — a native of San Francisco, a graduate of UC-Berkeley, and a Regent of the University of California. He also happens to be the husband of California Senator Dianne Feinstein.

Mr. Blum has been on the board of CBRE since 1993, and he’s been Chair since 2011. In 2001, Mr. Blum’s company, Blum Capital Partners, an equity investment management firm, did a leveraged buyout of CBRE for $800 million. In other words, Mr. Blum basically owns and runs CBRE.

The Blum-Feinstein relationship has received scrutiny because of Mr. Blum’s government contracts as well as his dealings with China, which raise conflict-of-interest issues with his wife’s official duties. For example, in 2009 the senator introduced legislation to provide $25 billion in taxpayer money to the Federal Deposit Insurance Corp, a government agency that had recently awarded CBRE a contract to sell foreclosed properties. Citizens for Responsibility and Ethics in Washington (CREW) urged the Inspector General of the FDIC to investigate the CBRE contract, but apparently that didn’t happen. (More on the web of connections, here and here, and more allegations, here.)

Mr. Blum’s CBRE isn’t a stranger to helping the government sell off assets. In October 2009, CBRE won a con­tract with the California Department of General Services to broker over $2 billion in office buildings the state wanted to privatize because of its financial problems.

No one has had much to say about the USPS-CBRE-Blum-Feinstein connection. The media have ignored it, and no watchdogs have seized upon it. There may be nothing to it. If there is anything amiss, don’t worry about rectifying matters in this lifetime. Mr. Blum is a self-professed Buddhist, so you can leave it to karma and reincarnation to take care of things.

The same story, over and over again

When the Postal Service sells one of its historic post offices, the storyline is always the same. The process begins with the Postal Service shifting letters carriers from the post office to an annex outside the downtown area. That leaves the retail end of the operations alone in the building, occupying a small part of the total square footage. A few months later, maybe a year or two, the Postal Service says that it can’t afford to maintain all the wasted space, so it would be better to move the retail activity to another location.

In some cases, the Postal Service waits to move the carriers until the building is under contract, but either way, the carriers and the processing work they do are always bifurcated from the retail end of things. The carriers go to one location, the retail clerks to another. (Decoupling mail processing and retail is another part of the privatization process.)

When it first informs postal workers and customers of its intention to sell the building, a USPS spokesperson inevitably tells the media that the Postal Service is only “considering” the building for sale, and a decision is months away. A few weeks later, there’s a community meeting, and the USPS spokesperson says the same thing: “No decisions have been made. We’re just looking into it.” That’s just a way to placate people and to make it seem as if they have plenty of time to persuade the Postal Service to change its mind.

The USPS spokesperson will also offer the boilerplate explanation for why the post office needs to be sold: The Postal Service is losing billions of dollars a year, and it has to look everywhere it can to cut costs. The downtown post office is much bigger than they need (the carriers have been moved away), so a small retail space would be more economical.

The news item about the pending sale will repeat this explanation as gospel, and the reporter will never look at the USPS financial reports, which show quite clearly that were it not for the Congressional mandate to prefund the retiree health fund at $5.6 billion a year (a totally unnecessary expenditure that’s designed to help the federal budget more than postal workers), the Postal Service would be practically breaking even.

When a closing is not a closing

Once the decision to move forward with the sale has been made, the Postal Service starts looking for a new location for retail services. Because the retail is just moving and not closing down completely, the Postal Service considers the closing of the post office as merely a “relocation,” not an actual “discontinuance.”

For a community watching its historic post office being closed and sold, the distinction is meaningless, but for the Postal Service, there’s a big difference. A discontinuance occurs when a town’s post office is closed completely and people need to go to another town to do their postal business. There are laws and regulations that govern exactly how this process is to be conducted. It involves advance notification, community meetings, surveys, and a particular timeline. Plus, a community can appeal the Postal Service’s decision to the Postal Regulatory Commission. The PRC can’t overturn a discontinuance decision, but it can remand the final determination to close the office back to the Postal Service for further consideration.

When it closes one of these historic downtown post offices, however, the Postal Service always sets up a small retail operation in a new location. The post office hasn’t “closed” — it’s just been “relocated.” Hence, there’s no need to go through a formal discontinuance process, and the community has no right to appeal. Actually, it can still file an appeal, but it won’t do any good. When the community in Venice appealed to the PRC a few months ago, the PRC dismissed the appeal on the grounds that it did not have jurisdiction over relocations. The same thing happened in Ukiah.

A small rural post office that serves a very small town and just leases a few hundred square feet in a ramshackle building turns out to be more protected by the law than a large, historic downtown post office serving an entire city. But that’s the way it is. Perhaps it’s a testimony to how much power rural communities have in Congress, or perhaps legislators never envisioned the Postal Service selling off its legacy of historic post offices.

Repurposing the public realm

While the Postal Service doesn’t have to follow discontinuance regulations when it relocates a historic post office, it does have to deal with Section 106 of the National Historic Preservation Act, which requires federal agencies to take into account the effects of their undertakings on historic properties. But the Postal Service knows all about following the rules of Section 106, and the Act has not turned out to be a tool for preventing the sale of post offices. It can ensure some protections, however, like making sure that a famous New Deal mural remains accessible to the public.

Once the Postal Service has a buyer, it sometimes tries to lease space in the same building so that the post office can remain open without a relocation. That keeps people in the community happy, but it usually turns out to be a temporary arrangement. The new owner has paid too much money for the building to worry about providing space for a post office. He has big plans, and a post office isn’t part of them.

After the new owner takes possession and gets all the permits in order, the building is repurposed. Old post offices have been turned into everything from a police station to a restaurant. Real estate magnate Peter Malkin, owner of the Empire State Building, bought the historic post office in Greenwich, Connecticut, and rumors say it will be turned into a Bergdorf-Goodman or some other high-end retailer. The post office in Palm Beach was purchased by a billionaire who made his fortune in credit default swaps; it’s now Sunshine Reality. The post office in Bethesda, Maryland, is being eyed for a condo development. The potential buyer for the post office in Venice, California, wants to convert it to a film production studio.

As for the economics, these historic properties are fetching two or three million dollars, sometimes more. The Postal Service saves some maintenance costs, but it has to start paying to rent space in another location. The Postal Service won’t share much information about these arrangements, but the average rent for a post office is about $2,000 a month, and in affluent places like the Connecticut Gold Coast and most of the locations in California, rents can run several times that amount. In Palm Beach, Florida, rumor has it that the Postal Service is paying $10,000 at month for the retail outlet that replaced the New Deal post office, which it owned outright. The economics of selling historic post offices only make sense if the long-term goal is complete divestiture.

California status report

Here’s a list of the fourteen historic post offices sold or for sale in California. For more on the history of these post offices and the famous murals and other artworks many of them contain, check out the Living New Deal website.

BERKELEY: Sale planned.

The most recent addition to the list of endangered post offices in California is Berkeley’s 98-year-old landmark building designed by architect Oscar Wendorth, in the style of a famous Renaissance hospital in Florence, designed by Brunelleschi. The Postal Service announced last week that it was planning to sell the Berkeley post office and to open another storefront in the neighborhood. No buyer or a price has been named. The Berkeley post office is on the National Register of Historic Places.

BURLINGAME. For sale.

The Postal Service announced in February its plan to sell the 1942 Burlingame post office. “Nothing is being taken away. We’re simply looking at relocating retail services,” said U.S. Postal Service spokesman James Wigdel. “The facility is three times the space we need. It’s literally a waste of space,” said Jeff Suess, real estate specialist in the Pacific Facilities Service Office for the U.S. Postal Service. Suess shared photos of post offices that had been turned into office space with cafes, a museum or, Suess’ favorite, a bed and breakfast. A public meeting was held in April, but no news since then.

FULLERTON: For sale.

There doesn’t seem to be much in the news about the Fullerton post office, but it’s listed on the USPS-CBRE website as “Coming Soon,” with “List price to be determined.” The building was constructed in 1938, for $56,000, in less than seven months. It has a 1936 mural by Paul Julian, depicting idealized images of Fullerton citrus, oil, and aviation industries. Julian worked as a cartoon background painter and Roadrunner voice artist for Warner Brothers.

HUNTINGTON BEACH: For sale.

The Postal Service announced in February that it planned to sell the 1935 Huntington Beach post office, but according to USPS spokesman Richard Maher, “No decisions have been made. We’re not sure if this would be able to be accomplished.” The building is a local landmark, and a few months ago, comedian Betty White used it as the backdrop for a scene of the TV show, “Off Their Rockers.”

LA JOLLA: Sale planned.

The Postal Service announced in January that intended to sell the building and relocate postal services to a smaller location. There’s a Save the La Jolla Post Office Community Task Force, and Save Our Heritage Organisation has also taken up the fight. USPS spokesperson Eva Jackson told the media, “A recommendation has not been finalized. Once a recommendation is made, it will be made public and there will be a 15 day appeal period.” The La Jolla post office was singled out by the National Trust when it declared the historic post office building to its list of endangered places.

MODESTO: Closed, sold.

The Postal Service can share the blame for the sale of the historic El Viejo post office with the GSA, which owned the building. The Postal Service closed the post office in April, then in September the building was sold for $1.02 million to developer Peter Janopaul III. He plans to convert the post office into ten, three-level residential lofts and a 4,000-square-foot penthouse, complete with a private pool, which will go for $1.6 million. Development may be hampered somewhat by the fact that the building is on the National Register. The Depression-era murals must remain available for public viewing, and the bronze postal boxes and the lobby’s ornate metal writing table will stay with the building as well.

PALO ALTO: For sale.

The Postal Service announced in December that the Palo Alto post office would be put up for sale. “We’re not closing any of these post offices, but we are relocating them,” said James Wigdel, a spokesman for the U.S. Postal Service. “It’ll be the same amount of retail when it’s all said and done.” The iconic building was designed by prominent local architect Birge Clark, whose other buildings include the Lucie Stern Community Center and various buildings on the Ramona Street Historic District. The building is probably worth about $6 million. In March, city officials submitted a letter of interest to the Postal Service, but no word yet on the response. In the meantime, the building is listed on the USPS-CBRE website as “Coming Soon.”

REDLANDS: For sale.

The folks in Redlands are lucky to have local resident Karlie Miller fighting to save the post office. She has singlehandedly taken on the Postal Service — and more besides. In March, when news came out that the post office would be closed and services relocated about three-quarters of a mile away to the New York station on Redlands’ west side, Miller went to work gathering signatures to save the post office. But she’s not only up against the Postal Service. The Redlands Historic Museum Association has set its sights on the building as a location for a city museum, and the City Council supports the idea. The downtown building has been on the National Register of Historic Places since 1985. No closure date has been announced, but the building is listed on the USPS-CBRE website as “Coming Soon.”

SAN RAFAEL: For sale.

The 75-year-old post office on D Street is slated to be closed and moved to a new downtown location. It contains a New Deal mural entitled “San Rafael Creek – 1851” by Oscar Galgiani, a life-long resident of Stockton and a founder of the Stockton Art League. The post office is listed on the USPS-CBRE website as “Coming Soon.”

SANTA BARBARA: Sale planned.

Residents learned in late April that the post office in Santa Barbara would soon be put up for sale, with retail services moving to a new, smaller location. The Postal Service says that since the carriers have been moved out, it only needs 6,000 square feet of the 50,000-square-foot property. The building is on the National Register, so no alterations can be made to its façade. A news report says that last year city officials toured the building and considered purchasing it for a police headquarters, but parking was somewhat limited. It’s possible a successful corporation may want the building as a “trophy headquarters.”

SANTA MONICA: Sale planned.

Citizens in Santa Monica learned in March that their historic post office would be closed and retail services relocated to a carrier annex about a mile away. USPS spokesman Richard Maher said an internal study had been completed on the financial benefits of consolidating in Santa Monica, but he would not release any information. “The plan has yet to be finalized,” says Mahler, and the financial information is irrelevant anyway. “We have to look at the bigger picture. In order to provide service to every community in the country, there will be facilities that may be consolidated that are actually operating at a profit, but for the good of the entire system, they will be consolidated.” Built by the Work Projects Administration during the Depression, the building is on the National Register. There will be a public meeting about the pending sale on July 17th.

SOUTH GATE: For sale.

After learning that the Postal Service intended to sell the Firestone Station, the South Gate City Council passed a preservation ordinance limiting future exterior alteration to buildings so designated. From now on, property owners must get a city permit for changes to the façade or architectural styling. The ordinance passed 3-0 with Vice Mayor Gil Hurtado, a postal employee, abstaining. The South Gate post office was dedicated in 1936, under Supervising Architect Louis Simon.

UKIAH: Closed, for sale.

When it learned in early 2011 of the Postal Service’s plan to close and sell the post office in Ukiah, the community did everything it could to save the post office. As usual, the Postal Service didn’t bother with a full discontinuance process, since retail services were relocated to a carrier annex on the edge of town. When the town appealed to the PRC, the case was dismissed, since the Commission can’t do anything about relocations. The post office closed in January, and the building was put in escrow, according to a broker handling the sale to some unnamed buyer. In May, the building was named to the National Register, but it doesn’t look like that will affect the sale. The building is currently listed on the USPS-CBRE website for $675,000. “It’s despicable,” said attorney Barry Vogel, who worked with a group of citizens to fight the sale of the Ukiah post office. “These closures take the guts out of local communities, subjugating us so that we become less free. We have fewer services and it makes life more difficult for hard-working people who have used this post office for 75 years.” (There’s more on Ukiah here.)

VENICE: Closed, sale pending:

The people in Venice put up a great fight to save their post office, but as in Ukiah, to no avail. An appeal to the Postal Regulatory Commission was dismissed, and while a legal suit is still pending, the Postal Service has already closed the post office and it’s proceeding with the sale. The retail services have been relocated to a carrier annex, and the building is in contract with film producer Joel Silver (Lethal Weapon, Die Hard, The Matrix), who’s also the co-inventor of Ultimate Frisbee. The post office is listed on the USPS-CBRE website, for $7.5 million. There’s a great story about the efforts to save the Venice post office here, and there’s more here. The post office contains artist Edward Biberman’s 1941 mural, ‘Story of Venice,’ which depicts Abbot Kinney, the founder of Venice.

What’s to be done?

Many of the communities facing the loss of their historic post office have formed “save the post office” groups, created Facebook pages, done petition drives, and lobbied their elected officials. Nothing seems to be able to stop the Postal Service. As we’ve seen with Venice and Ukiah, appeals to the PRC and lawsuits don’t seem to work either.

The one thing that hasn’t happened yet is forging a unified front against the Postal Service. Perhaps if all the communities in California faced with losing their post office got organized, they might have more success than fighting the Postal Service alone. Perhaps they could appeal directly to Senator Feinstein, who might have a word with her husband over dinner one evening. You can contact the senator here.

Another approach would be to contact the Postal Service officials who are responsible for the sales. They’ll be happy to hear from concerned citizens — the more the better. Here’s the contact info for a few of the postal executives who have may some influence: